Lender enters into EU over interest rate errors
Fair Loans Foundation has entered into an enforceable undertaking under which it will refund 864 consumers around $157,000 in overcharged interest.
The lender currently operates on a not-for-profit basis to provide credit to financially disadvantaged consumers as an alternative to high-cost payday lenders, the Australian Securities and Investments Commission (ASIC) stated.
As part of the regulator’s action against Fair Loans, it has also issued two infringement notices totaling $22,000 for related breaches of the National Consumer Credit Act.
ASIC’s investigation found that the interest rate being disclosed to consumers in the advertising and loan contracts was less than the actual rate charged.
The provider disclosed an annual percentage rate of 15.95 per cent or 19.95 per cent when the actual rate of interest charged was 28.25 per cent or 35 per cent, according to investigation findings.
The regulator has accepted the EU from Fair Loans in resolution of its concerns over the miscalculation and disclosure of interest.
Fair Loans has repaid the overcharged interest to a number of affected customers and has entered into a repayment plan to pay the infringement notices.
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